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Bay Area start-up Skully was a ‘sham,’ ex-employee says

Skully Inc. was supposed to revolutionize the motorcycle industry, raising millions of dollars to manufacture futuristic augmented-reality helmets.

Instead, the founders of the Bay Area start-up are accused of spending company money on vacations, sports cars, their San Francisco rents, weekly apartment cleanings, meals out and a visit to a strip club.

According to a lawsuit filed by a former employee, the company was a “sham” and the founders, brothers Marcus and Mitchell Weller, expensed their lavish lifestyles. When the money ran out last week, the company shut down.

“The Wellers used Skully corporate accounts as their personal piggy banks,” according to the complaint filed in state court in San Francisco last month, “and demanded that plaintiff conceal the true nature of the expenses by entering them in Skully’s books to make it appear that the expenses were incurred for legitimate business expenses, which in fact they were clearly not.”

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Skully did not respond to requests for comment.

The San Francisco company left scores of angry customers who have yet to receive the high-tech helmets they paid for, including fans who poured $2.4 million into Skully’s Indiegogo crowdfunding campaign in 2014.

Those early backers, many of whom pre-ordered helmets for $1,400, are unlikely to see a refund — which highlights the risks of the crowdfunding industry. Once a campaign ends, Indiegogo has no obligation to refund contributions or intervene in disputes between backers and companies, according to the platform’s terms of service.

The lawsuit was filed by Isabelle Faithhauer, the Wellers’ former assistant who says she was responsible for the company’s bookkeeping and wrote fraudulent entries for expenses paid for with Skully money, including two Dodge Vipers, an Audi R8, limo rides in Florida and a $2,000 charge at a strip club.

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Last year, the Wellers booked a trip to Bermuda, but “Marcus Weller was not pleased with Bermuda,” so he booked a first-class flight to Hawaii on 24 hours’ notice at Skully’s expense, Faithhauer’s lawyer wrote. After receiving a traffic violation in his Audi, Marcus Weller made Faithhauer attend driving school on his behalf and charged the related $450 attorney expense to the company, the complaint said.

Faithhauer is suing for employment violations, alleging that the Wellers failed to pay her overtime and give her meal breaks, and that they fired her when she complained about their accounting practices.

Skully shut down Friday, citing “unforeseen challenges and circumstances beyond our control” that made it impossible for the company to raise more money.

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The Weller brothers, both avid bikers, founded Skully in 2013 with the idea of transforming motorcycle helmets into smart devices that the fictional Tony Stark would be proud to wear with his Iron Man suit. The Skully AR-1 helmet was touted as including a transparent screen in the visor that displays GPS directions, speed and other information before the rider’s eyes; a rearview camera; Bluetooth; and voice control.

The idea took off, with almost 2,000 backers contributing money to what became one of Indiegogo’s most successful technology projects. Skully raised an additional $11 million last year from investors including Intel Capital and Walden Riverwood Ventures, but the company soon began missing its targeted shipping dates.

Last month, Skully brought in a new chief executive to fix the problem, hiring former HTC North America Vice President Martin Fichter into a role originally held by co-founder Marcus Weller. In a July 18 blog post, Fichter promised customers that they would get their helmets.

“We are shifting gears as a company to deliver on a promise we made to you,” he wrote. “As a team, we’ve taken the necessary steps to accomplish this mission, including a change in leadership and top-to-bottom review of our manufacturing and communication processes.”

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Fichter promised Skully would deliver 400 helmets to customers by the end of July, with the remaining pre-orders shipping throughout the summer.

Less than a month later, Skully called it quits, announced the company plans to file for bankruptcy and apologized to customers, employees and partners.

Kendall writes for the East Bay Times/McClatchy.

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